Spectrum auction suffers jolt

OUR BUREAU

Call on hold

New Delhi, Feb. 25: The government’s 2G spectrum auction next month looks set to flop with just one company — Russia’s Sistema — applying to participate and that too in just one of the three bands offered for sale.

The department of telecommunications (DoT) had announced an auction for spectrum unsold in November (800MHz and 1800MHz bands) along with spectrum that is being held by operators (900MHz band) whose licences are due for renewal in 2014.

With most of the operators skipping the auctions, the government will find it hard to meet its fiscal deficit target. In fact, the government was expecting to mop up more than Rs 40,000 crore if all the spectrum was sold at base price.

Reacting to the muted interest shown by companies, telecom minister Kapil Sibal said: “Fate of this sector is being decided somewhere else. The government has done its best and meticulously followed the Supreme Court order.

“I think that the government’s hands were tied and the result is for everybody to see,” he added.

Even after the government slashed the base price by 50 per cent for CDMA spectrum (800 MHz band), no telecom company applied, except Sistema’s Indian joint venture Sistema Shyam Teleservices.

The price of spectrum (1800 MHz band) in Delhi, Mumbai, Karnataka and Rajasthan was reduced by 30 per cent after no bids were received in November. But even after a price cut, there were no takers.

“No application was received for the second round of 2G GSM spectrum till 5pm today, while Sistema Shyam was the lone applicant in the CDMA spectrum auction,” a DoT source said.

Sistema Shyam Teleservices, which has lost permits in 21 telecom circles, has stopped operations in 10 circles. It is assumed that it will bid for the remaining 11 telecom zones.

While cancelling 122 2G telecom licences, the Supreme Court on February 2, 2012 had asked the government to allocate spectrum to companies through an auction.

The CAG had estimated that spectrum allocated to telecom companies in 2008 could have fetched the national exchequer a revenue of around Rs 1.76 lakh crore.

Today was the last day for submitting applications to participate in the auction starting March 11.

A DoT official, who did not wish to be named, said the government may add more service areas in the proposed third round of auction.